CFPB Official Praises Non-Banks for "Groundbreaking" Financial Innovation

SAN FRANCISCO — A senior Consumer Financial Protection Bureau official brought the agency's charm offensive to the West Coast on Thursday, praising bankers and non-bank executives for their "groundbreaking work" providing financial services to poor consumers.

"Listening to organizations in the field and learning from your experience are crucial to our work in addressing the financial challenges faced by low-income and economically vulnerable people," David Silberman, the CFPB's acting associate director for research, markets and regulations, said during a speech on Thursday.

"We approach our task with on the one hand great humility, and also with full appreciation and respect for the groundbreaking work that so many of you have done," he added.

Silberman was addressing the Underbanked Financial Services Forum, an annual conference sponsored by the non-profit Center for Financial Services Innovation and American Banker. The three-day event in San Francisco focuses on financial services for the young, poor, immigrants or other people who do not have or do not regularly use bank accounts.

Silberman spent much of his talk recapping the young agency's six-month history, but told the audience that the CFPB intends to become even more involved in the financial industry's efforts to innovate.

"It's important to note that the bureau is not just a regulatory and enforcement agency. Our mission, our mandate requires us to do more, especially when it comes to the underserved," he said, adding that the Dodd-Frank Act "states that one of our core functions is to ensure that 'markets facilitate access and innovation.'"

He acknowledged some of the financial industry's wariness about his agency, especially from non-bank financial companies like remittance providers, check-cashers and payday lenders.

"For most of the non-banks we supervise, including, I suspect, a number of the people in this room, this will be their first experience with a federal supervisory relationship," he said. "We intend to be transparent in our expectations of those institutions, so that there should be no 'gotchas.'"

But Silberman also acknowledged that the CFPB can only do so much to reduce some of the new regulatory burdens for non-bank financial companies, many of which have historically been regulated at the state level and not at the federal level.

"We are establishing constructive relationships with the states. I believe that as we develop our credibility at the federal level, it will be easier to develop several state partnerships, so it won't be as difficult," Silberman said in response to a question. "But I can't promise that we're going to get rid of the federal system."